The National Land Agency (NLA) said last Monday that there were 212 foreclosures last year, up from eight in 2010. That’s a staggering 2,550 per cent increase. The rise is juxtaposed with increasing loan defaults in the downturn and falling sales at auction.
The most recent industry data from the central bank shows that underperforming loans have increased 46.3 per cent in the annual period ending September 2011.
Central bank regulated entities – banks, near banks and building societies – had just under J$28.9 billion in non-performing loans on their books at that date.
The NLA, where foreclosure applications are filed and approved via the registrar of lands, said that until 2011, foreclosures were rare in Jamaica.
There were eight foreclosures in 2010; two in 2009; and none in 2008.
But the agency declined to break out the data, as did various private mortgage lenders.
“We really only started to get serious about foreclosures in 2011 but the numbers are not as high as some people think,” said one mortgage executive who spoke on condition of anonymity.
“The numbers are under 100,” he said, referencing foreclosed properties.
William Tavares-Finson, a top auctioneer, suggests that foreclosures have spiked because of low sales through the auction system.
The newspapers advertise scores of properties for auction monthly, but both Tavares-Finson and the mortgage banker said the number of ads can be misleading.
“I can’t give you numbers for properties sent to auction because some properties were listed as many as four times in 2011. What is to be noted is that 96 per cent of property owners updated their accounts before the actual auction,” the mortgage executive said.
Tavares-Finson said that between 2009 and 2011, the annual average for properties advertised for auction was just about 1,000.
In 2009, only 32 per cent made it to the block with 60 per cent withdrawn before the advertised auction date. Auction sales amounted to 2.3 per cent of the lot, he said.
In 2010, some 66 per cent of properties were withdrawn before auction, 23 went on the block, and sales were 1.5 per cent of advertised properties.
Last year, advertised properties declined by 12.2 per cent — 63 per cent were withdrawn before the auction, 30 per cent went on the block, and sales amounted to 3.9 per cent.
“From our perspective, the mortgage market is improving,” the auctioneer said.
Tavares-Finson’s auction house DC Tavares & Finson Limited last week again listed a number of commercial properties for auction – including Jobs Plaza in Hopewell, 5C Albion Estate in St Thomas, the Palms hotel in Negril, 28 Lancaster Road in Eastwood Park Gardens and two coffee farms in Portland listed as 59.66 acres in Mount St Bernard and Bangor Ridge.
But whether there were broadly more forced sales for commercial properties was unclear, he said.
“What is on the increase is the number of foreclosures, with the banks seeking to take these properties on their books, perhaps as per regulatory requirements by the central bank,” Tavares-Finson said.
The Bank of Jamaica (BOJ) said, however, that it does not require banks to “realise on” or dispose of assets backing bad loans, and that there are restrictions on the amount of fixed assets institutions are allowed to add to their books.
